Palm Beach Finance U.S. Trustee ordered to appoint Chapter 11 trustee

By Caroline Salls

Pittsburgh, Jan. 28 - Palm Beach Finance Partners, LP's U.S. Trustee has been ordered to appoint a Chapter 11 trustee to oversee the company's bankruptcy case, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Florida.

As previously reported, U.S. Trustee Donald F. Walton asked the court to either convert the company's Chapter 11 bankruptcy case to Chapter 7 or appoint a trustee.

According to Thursday's order, the case conversion motion has been denied as moot in light of the trustee appointment.

In his motion, Walton said Palm Beach Finance and its Palm Beach Finance II, LP debtor are currently functioning with no general bankruptcy counsel and with a proposed chief restructuring officer who is a creditor of their estates.

"Due to the conflicts between the estates, the proposed CRO and proposed bankruptcy counsel, the U.S. Trustee submits that time is of the essence that a trustee, be it a Chapter 11 or Chapter 7 trustee, be put into place to handle the matters that need to be addressed," Walton said in the motion.

Walton said the Palm Beach funds are currently not operating and have not operated for more than 12 months.

In addition, the U.S. Trustee said the funds had no income in 2008 or 2009, and the only assets of their estates appear to be the prosecution of claims against third parties.

The Palm Beach funds are based in Palm Beach Gardens, Fla. They filed for bankruptcy on Nov. 30, and the Chapter 11 cases are being jointly administered under the case number 09-36379.

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